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Hong Kong opens financial dispute resolution centre
Hong Kong takes another step to preclude massive investor losses from unregulated equities trading.
The city’s newly opened Financial Dispute Resolution Centre was established to help customers seeking claims against banks or brokers. The centre provides an avenue for customers with claims of up to US$64,000 and will allow them to settle disputes with banks and brokers outside of court.
It expects to handle around 2,000 cases per year. Financial institutions will shoulder the brunt of the costs for the mediation sessions.
The centre will be funded by the Hong Kong government and the city's regulators for the first three years, after which it will be supported by financial institutions. It will cost around US$7 million a year to operate.
The centre is part of the government's new regulatory measures put in place after the collapse of Lehman Brothers in 2008.
Hong Kong investors suffered massive losses after buying some US$1.5 billion worth of high-risk structured products, or mini-bonds, from Lehman Brothers that became worthless after the collapse of that firm.
Investors then sought help from Hong Kong regulators and said they had been misled by banks and brokers into buying the mini-bonds.